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TMI BlogClarification regarding taxability of supply of securities under Securities Lending Scheme, 1997.X X X X Extracts X X X X X X X X Extracts X X X X ..... ending and borrowing of securities. Under the Scheme, lender of securities lends to a borrower through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same type or class at the end of the specified period along with the corporate benefits accruing on the securities borrowed. The transaction takes place through an electronic screen-based order matching mechanism provided by the recognised stock exchange in India. There is anonymity between the lender and borrower since there is no direct agreement between them. 2.1 The lenders earn lending fee for lending their securities to the borrowers. The security lending mechanism is depicted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956 are not covered in the definition of goods under section 2(52) and services under section 2(102) of the Assam Goods and Services Tax Act, 2017. Therefore, a transaction in securities which involves disposal of securities is not a supply in GST and hence not taxable. 4.1 The explanation added to the definition of services w.e.f. 01.02.2019 i.e." includes facilitating or arranging transactions in securities" is only clarificatory in nature and does not have any bearing on the taxability of the services under discussion (lending of securities) in past since 01.07.2017 but relates to facilitating or arranging transactions in securities. 4.2 The activity of lending of securities is not a transaction in securities as it does not invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to pay IGST again in lieu of such GST payments already made. 5.2 With effect from 1st October, 2019, the borrower of securities shall be liable to discharge GST as per Sl. No 16 of Rate Notification No. 22/2019 under reverse charge mechanism (RCM). The nature of GST to be paid shall be IGST under RCM. 5. This Circular is clarificatory in nature and not meant for any interpretation of provisions of the Act and rules. 6. Difficulties, if any, in implementation of the above instructions may be brought to the notice of the Commissioner at an early date. 7. This Circular shall be deemed to have been issued on 11th October, 2019. Sd/- Anurag Goel, IAS., Commissioner of State tax, Assam, Dispur, Guwahati Memo No. CT/GST-15/Pt-I/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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